The turmoil in the Liberal Party highlighted by the downfall of Malcolm Turnbull has been the most important development in Australian politics over the last year. It reflects that politics here is catching up with international developments (the rise of Trump, the surge in support for the far right in Europe, increasing authoritarianism and xenophobic nationalism and so on) as the crisis of neoliberalism continues to erode the credibility of the long-dominant mainstream parties and faith in parliamentary democracy.

The Liberals’ so-called moderates may have narrowly prevented home affairs minister Peter Dutton from becoming prime minister. However, they have no alternative program that offers a way forward for conservative politics or the capitalist class. They repeatedly make concessions to the hard right, which has an agenda of extreme racist nationalism, law and order hysteria and the undermining of democratic rights.

The “moderates”, of course, were never all that moderate. In pursuing the interests of the ruling class to force up the rate of exploitation of the working class or to wage imperialist war, the likes of Turnbull or defence minister Christopher Pyne could be just as brutal as the Tony Abbotts of this world.

The same applies to the ALP. The Hawke and Keating governments pushed through neoliberalism in Australia, drove down wages, savaged union organisation and backed the first Gulf War on Iraq.

The Liberals’ rightward trajectory is reflected in the candidate that the “moderates” rallied around to stop Dutton. Scott Morrison as immigration minister was the architect of the vile Sovereign Borders boat turn-back policy. As treasurer, he fought hard against a royal commission into the banks and championed big business tax cuts. He led the “It’s okay to say No” forces in the lead-up to the marriage equality plebiscite. And, as social services minister, he cracked down on welfare recipients.

The broad agenda previously shared by both “moderate” Liberals and the ALP was economic neoliberalism (privatisation, tax cuts for big business, deregulation, the running down of the health, education and social security systems, and attacks on unions) combined with a limited social liberalism on issues such as multiculturalism, women’s and LGBTI rights, and token support for action on climate change. This social neoliberal agenda is no longer palatable to large sections of the population who have become cynical about the whole political process.

Trust in parliament and political parties has collapsed. According to a 25 September Guardian Essential Report, only 2 percent of people have a lot of trust in political parties, and only 3 percent have a lot of trust in business groups.

Under John Howard’s Liberal government from 1996 to 2007, there was a shift away from the more inclusive neoliberalism of the Hawke and Keating years to the culture wars: attacks on Aborigines, refugees, single mothers, the unemployed and, later, Muslims. Howard gave the Liberals a brand distinct from the unpopular Keating government – which presided over the sharp “recession we had to have” in the early 1990s – coopted popular discontent with promises of a “more relaxed and comfortable” Australia and re-cohered the Liberal base, a section of which was defecting to Pauline Hanson in the late 1990s.

Howard’s approach set an important precedent for later reactionary developments. But he was still mild compared to the full throttle racist nationalism and authoritarianism unleashed in Italy, Austria or the US today.

In part, this was because, prior to the 2007-08 global financial crisis, the relatively greater strength of the Australian economy allowed the Liberals to shore up support through “middle class welfare” handouts to sections of their voting base. And although Australian society was becoming more unequal, real wages continued to rise during the Howard years. This limited working class mobilisation.

The threat of Hansonism was in part contained by the wave of protests against her racist politics, which made it difficult for her to organise softer supporters. She also proved incapable of cohering a core of activists, and One Nation suffered repeated splits and defections.

Global politics after the crash

Significant popular discontent with neoliberalism surfaced well before the global financial crisis – think of the anti-globalisation protests of the early 2000s. But the 2008 economic collapse was a turning point. With a swathe of countries ravaged by the crisis, hundreds of millions of people knew that neoliberalism had failed. This has been further confirmed by the slow, drawn-out nature of the recovery from the crash. The benefits of the recovery have gone overwhelmingly to the wealthy.

Governments continue to impose austerity, and wages continue to be held down. In Australia we have had the longest period of wage suppression since the Accord years of the late 1980s. According to the IMF, Australia has one of the fastest growing rates of income inequality.

Internationally, the fortunes of the billionaire class have surged. According to the 2018 Forbes rich list, there are now 2,208 billionaires, whose total net worth is $9.1 trillion – up from $7.7 trillion in 2017. In this context, the idea that everyone benefits from neoliberal economics via the “trickle down effect” becomes difficult to sell.

No wonder mainstream politicians have increasingly turned to scapegoating refugees, migrants, Muslims, “African gangs” or whoever to divide people and deflect discontent. In turn, they have opened up space for fascist and far right forces.

Not that the growth in support for the far right in Europe correlates in a one to one way with the state of the economy. It is not just in the poorer eastern European countries or depression-racked Greece that the far right has taken off. Powerful far right forces have emerged in strong economies such as Germany and in the supposedly liberal social democracies of Scandinavia. The far right Swedish Democrats scored more than 17 percent in recent elections.

There are specific factors at work in the political histories of each country, the tradition of far right organising, the impact of the Syrian refugee crisis and so on. But there is also a contagion across Europe, far right successes in one country spurring on like-minded forces in others.

The beneficiaries of the disillusionment have not always been the right. Left wing ideas that break with the mainstream political consensus can get a hearing: Jeremy Corbyn in Britain, Podemos in Spain, Bernie Sanders in the US and Syriza (before it capitulated) in Greece. But the far right undoubtedly has been the major beneficiary.

This reflects the numerical weakness and political limitations of the genuine socialist left in most countries, the depressed level of working class mobilisation and broader social struggle in the Western capitalist countries, and that the mainstream parties and media have for decades paved the ground for the far right by demonising refugees, Muslims, migrants and others.

Australia

In Australia, popular attitudes on a whole range of issues remain well to the left of the mainstream of the Liberal Party. Most people support maintaining penalty rates, value spending on health and education over tax cuts, want action on climate change, are for greater rights for women, despise the banks and don’t think the ABC is the devil incarnate.

Indeed, the proportion of Australians who identify as left wing has risen from 19 percent in 1996 to 31 percent in 2016; support for the right has remained steady at 16-17 percent. This confirms that there is a space for a genuinely left wing alternative.

The trouble is that, except for the marriage equality plebiscite last year, people don’t get to express directly, let alone impose, their progressive stances. Given the low level of class struggle, the absence of a strong left to galvanise progressive attitudes into action and the justified cynicism about the ALP, the hard right can often win by default.

The cynicism and disengagement from the political process are reflected in the long term decline in the membership of the mainstream parties, particularly the active membership. Decades ago, the Liberals had a mass middle class membership of around 200,000. Today they are down to only 40-50,000. Reports consistently talk of sparsely attended Liberal branch meetings dominated by older people in their 60s and 70s. This inevitably gives a socially conservative bent to the branches, which provides an important base for the likes of Kevin Andrews, Eric Abetz and Peter Dutton.

It also makes it much easier for small groups of hard right activists, some of whom were previously members of Family First, to take over local branches. In Victoria, a coalition of ultraconservatives, Christian fundamentalists and Mormons, in alliance with party president Michael Kroger, won 13 of 19 seats on the powerful administrative committee.

As confirmed by the Wentworth by-election and the Victorian state election, on issues such as marriage equality, climate change and hostility to “political correctness”, the Liberal Party membership is well to the right of many Liberal voters and of considerable sections of the capitalist class.

The ruling class is not obsessed with the shibboleths of the social conservatives. It is not impressed by the turmoil in the Liberals: it wants political stability so it can get on with making money. Most of its members would prefer one of their own, an urbane banker like Malcolm Turnbull, to a Peter Dutton. Queensland MP George Christensen is undoubtedly seen as socially gauche in Toorak and Point Piper.

But it is notable that, when the crunch came, the capitalist class did not intervene hard to support Turnbull. The ruling class as a whole might not be in love with the social conservatives, but most recognised that Turnbull had been a political failure and that the Liberal moderates had no project that offers a way forward. On the other hand, the hard right has an agenda that it is prepared to wreak havoc in the Liberal Party to impose.

This Liberal crisis is no small thing. The Liberals have been the main party of bourgeois rule since World War Two. The turmoil in their ranks makes them a much less useful instrument for imposing the ruling class agenda. It reinforces cynicism about the whole political set-up. It also opens the space for various independents and minor parties, which can make the Senate even more unpredictable from a ruling class perspective.

All of this leaves the ruling class in a bind. In the short term, it is likely reluctantly to acquiesce in a Labor victory while attempting to ensure that there is not a collapse in the Liberal vote. In the medium term, the most likely development is that it will, reluctantly or otherwise, go along with large chunks of the core agenda of the hard right.

But that could be a messy process marked by further internal upheavals in Liberal ranks. We can’t rule out the possibility of further splits by sections of the right or some moderates.

Coal-loving and religious fundamentalism might not be the cup of tea of all capitalists. But rampant racism, hard core nationalism and law and order rhetoric seem to be the only thing on offer in conservative politics. One major difficulty for the ruling class may prove to be immigration. The hard right wants to latch onto the popular narrative that high levels of immigration are leading to overcrowding, higher house prices and a lack of infrastructure.

That approach comes up against the ruling class’s longstanding commitment to mass immigration to fuel the economy and profits. The exact way this, and other issues, will play out is difficult to predict – possibly a fudged compromise in which the ruling class acquiesces to an upsurge of anti-migrant racism by the Liberals but only a limited actual cut in the numbers.

Left and right: Labor fails

The failure of the ALP and the union movement to offer anything approaching an inspiring alternative is a further factor opening up the space for the hard right within and outside the Liberal Party. The ALP leadership has noted the growing discontent in Australia and developments internationally – the rise of Trump and the hard right on the one hand and the success of Sanders and Corbyn on the other. Labor has moved a little to the left to take electoral advantage of this mood.

However, Labor’s mild shift is nowhere near radical enough to enthuse broad sections of workers or young people, let alone a Corbyn-style surge of new members. Most workers still vote Labor, but many rightly see little difference in practice between the two major parties. A stark reflection of Labor’s inability to inspire is that Bill Shorten is even less popular than Scott Morrison as preferred prime minister.

The ALP leadership remains too committed to the capitalist establishment to undertake the radical measures needed to resolve the problems confronting the mass of people – stagnating wages, high utility prices, unreliable public transport, housing unaffordability, inadequate health care and child care. Addressing these issues would require massive tax increases on big business and the super rich, the re-nationalisation of privatised services, a dramatic winding back of anti-union laws and so on.

There is no way that the Labor right will go down that road. Labor’s limited redistributive measures are predominately aimed at affecting sections of the middle class and some better-off workers. At best, Labor says it will not further cut the corporate tax rate, though shadow treasurer Chris Bowen has indicated that he might even be open to that at some point.

On military spending, the US alliance, hostility to China, harsh anti-terrorism laws and refugee bashing, Labor remains virtually in lock step with the government. Notably, Shorten hardly ever utters a word of criticism of Trump.

As for the so-called Labor left, it has done nothing to challenge the right. Indeed, the leader of the parliamentary left, Anthony Albanese, to curry favour with the Murdoch press, attacked Shorten from the right for being too hostile to big business.

The union movement has turned itself into a virtually uncritical appendage of the ALP. The ACTU’s Change the Rules campaign is a massive step backward from the Your Rights at Work campaign – for all the latter’s serious limitations – against the Howard government. Change the Rules is focused overwhelmingly on corralling union activists into doorknocking, phone banking and leafleting for Labor. This will do nothing to revive the parlous union movement.

Prospects

Labor seems set to win the federal election. But it will be a victory largely by default and because of the turmoil in the Liberals, not because workers have any great faith that Labor will deliver substantial positive changes.

The most likely scenario is that we will have another Labor government that rules for the big end of town. If the economy holds up, Labor will probably give a few minor concessions to workers. But it will do nothing to resolve the serious problems confronting people’s lives. As even Rupert Murdoch noted, “I can make money under Shorten and the CFMEU”. Disillusionment is likely to intensify, and the political world will become even more volatile.

In opposition, the Liberals could well jag even further to the right. They will want to re-cohere their base by launching an assault on the supposedly “politically correct”, out of control government in the pocket of the CFMEU. The Liberal “moderates” have no viable alternative agenda to block such a right wing lurch.

The political stakes are getting higher and higher. Throughout the Western world, the social fabric is being torn apart by the crisis of neoliberalism. Faith in key institutions of the liberal capitalist order – parliament, political parties, the media and so on – is being eroded. This opens up a space for both the radical left and the far right.

In most Western countries, the neoliberal crisis has not yet led to a marked rise in strikes or social struggles or the emergence of a strong far left. This means that the far right has often been better placed to take advantage of the situation. On the other hand, the shock of far right gains has the potential to open up resistance and lead to the emergence of a new left. We have seen some initial, but still limited signs, of that in the US in response to the victory of Trump.

Australia has lagged somewhat behind these trends. But now, as the turmoil in the Liberals indicates, we are catching up to the worldwide pattern that has been sharply reinforced by the election of Trump. We can’t know for sure how that polarisation will play out here. But the need for a principled fighting left that can both stand up to the advances of the far right and mobilise for the defence of working class living standards could not be clearer.